Publications

Just in time for the holidays, the National Labor Relations Board (“NLRB”) and the U.S. Department of Labor (“DOL”) have delivered additional workplace protections for workers and prospective unions this month.  Whether those government agencies are viewed as Santa or the Grinch coming down workplace chimneys depends upon one’s perspective.

Specifically, the NLRB gave a sugary treat to unions and employees who want union representation by ruling in early December that, under most circumstances, workers must be permitted to use their employers’ email systems for purposes of union-organizing activities.  Then, in mid-December, the NLRB stuffed the stockings of unions and employees who desire union representation by issuing a final rule shortening the time to hold an election to determine whether a majority of workers want to be unionized.

Many employers worry that this speedy-election change, which becomes effective on April 14, 2015, will diminish management’s ability to stage an anti-union campaign prior to voting.  As such, employers who are concerned about unionization likely will focus on year-round anti-union avoidance programs, instead of anti-union campaigns that commence only upon the filing of a representation petition.

Next, as though flying from one significant decision to another behind a team of reindeer, the NLRB issued complaints alleging that McDonald’s USA LLC, a franchisor, and a number of its franchisees committed labor law violations.  In particular, the NLRB accused these “joint employers” of violating the rights of employees who engaged in protected conduct to improve working conditions by participating in nationwide protests.  According to the franchisor, the NLRB’s complaints “improperly and dramatically strike at the heart of the franchise system,” and amount to overreaching by the agency.

Between those developments, the DOL issued final regulations barring discrimination against lesbian, gay, bisexual, and transgender employees and applicants by federal contractors and subcontractors.  Those regulations have been highly anticipated to implement a Presidential Executive Order issued in July prohibiting such discrimination.

While those regulations were long expected and welcomed by many, their issuance this month was greeted by some with some bah-humbug grumbles because the DOL delivered them without providing an opportunity for public comment.  In a related development, the U.S. Department of Justice released a memo on December 18 indicating that the U.S. government can now file claims against employers on behalf of workers who allege that they were discriminated against because of their transgender status.

The takeaway from these developments is that employers will face a sleigh-full of significant and unfamiliar challenges in the New Year.  To promote the chances for prosperity and happiness in 2015, employers should consider seeking advice from legal counsel to ensure that their policies and practices do not run afoul of these new legal guidelines.

The last time I checked (which was a couple of years ago), I found 979 U.S. patents in the U.S. Patent and Trademark Office’s database that had the word “Christmas” in the title.  Every year at this time, I look at a few of the most interesting ones.

My favorite one this year is U.S. patent no. 5,523,741 entitled “Santa Claus Detector.”  This patent covers a Christmas stocking that contains a light bulb or LED, a battery to power the light, and a hidden switch that turns on the light.  The switch is connected to a pull cord.  When the stocking is hung on the fireplace, the pull cord is positioned across the opening of the fireplace, forming a barrier across the fireplace opening.  After the child has gone to sleep on Christmas Eve, Santa Claus comes down the chimney with his bag of toys and triggers the cord, which turns on the light.  The next morning, the child will see the light on and know that Santa was there! (Or, as the patent describes, the parent can secretly pull the cord and turn on the light.)  The purpose of this invention, according to the inventors, is to reassure children that their good behavior was rewarded by Santa.

Another fun Christmas patent is the “Santa Claus Visit Kit,” U.S. patent no. 7,258,592.  This kit is used by parents to prove to a child that Santa Claus has visited.  The kit includes a stencil to leave boot prints on the floor, a letter from Santa, and a snack item for Santa.  The kit is intended to alleviate a child’s fear that Santa Claus might not leave presents.

There are several patents for fire extinguishers incorporated into Christmas decorations.  One patent covers a fire extinguisher hidden inside the trunk of a synthetic Christmas tree that is activated by a heat sensor.  Another patent is for a Christmas tree ornament that contains a fire-retardant powder.  The ornament pops open when the temperature reaches a certain point, releasing the fire retardant powder and, hopefully, putting out the fire.

My all-time favorite Christmas patent, however, is the “Apparatus to Prevent Pets Climbing a Christmas Tree.”  The need for this invention is not surprising to anyone who has kittens or cats.  As the patent explains, “as is generally well known in the prior art, pets, such as cats, like to climb up the branches of a Christmas tree.  [Duh!]  Oftentimes this will result in knocking some of the ornaments off such tree.  These ornaments may be broken…”  The invention is basically a giant circular screen that clips under the lowest branches of the tree, and is intended to frustrate the climbing felines.  If you have a cat, however, you know that this device will have precisely the opposite effect.  Any cat who sees this big screen will be curious and simply jump up onto it.  The screen will become a staging platform for your cat to explore the tree.  So, I don’t think it will work.  But, actually, who really wants to stop cats from climbing Christmas trees?  It’s way too much fun to watch them perched on the branches, swatting ornaments, and looking embarrassed when they land clumsily on the floor!

On September 11, 2014, the Ninth Circuit heard oral argument on the appeal in Davis v. Electronic Arts (Case No. 12-15737), a class action lawsuit brought by three former NFL Players against Electronic Arts (“EA”), the publisher of the renowned Madden NFL Games.  Michael Davis, Vince Ferragamo, and Billy Joe Dupree claimed that EA violated their right of publicity by using their likeness and the likeness of six thousand other similarly situated former NFL players without permission.  The Ninth Circuit has yet to issue its ruling on the appeal, but most legal scholars agree that EA has almost no chance of prevailing on the issue in light of the Ninth Circuit’s holding in Keller v. Electronic Arts (Case No. 10-15387) where the Ninth Circuit found that EA unlawfully utilized the images of collegiate athletes in its NCAA Football game series.

Interestingly, EA put forth the same argument in Davis as it did in Keller.  Specifically, EA argued that its portrayal of the class members is protected by the First Amendment under the doctrine of transformative use, which analyzes whether the challenged work or product contains significant transformative elements (or value that) does not derive primarily from the celebrity’s fame.

At the oral argument, counsel for EA cited to a footnote in the Keller decision wherein the court reserved the “question of whether the First Amendment furnishes a defense other than those the parties raise.”  EA argued that the footnote provided the court with the wiggle room it needed to come to a different conclusion than it did in Keller.  EA urged that the court prescribe a second standard for the use of likeness in books, films, and video games.  Specifically, EA argued that the extensive labor and detail involved in making a video game should almost guarantee that the product is entitled to First Amendment protection as an expressive work.  Judge Marsha S. Berzon was not very receptive to this argument and remarked that the creation of a video game sounded more like a compilation of data than an expressive work.  EA responded that a great deal of creative expression is embodied in that compilation.  Whether the Court accepts EA’s position remains to be seen.

EA raised a new argument that the depiction of the NFL class members should qualify as incidental use and be protected under the First Amendment.  Specifically, EA argued that the avatars that the class members complained of were merely a “few of the thousands of virtual athletes in its Madden NFL video game. “Where the use of plaintiff’s name or likeness is incidental in relation to the defendant’s work as a whole, the use is not actionable under the right of publicity.”  It remains uncertain whether this new argument will suffice to overcome the Court’s previous ruling regarding the right of publicity in the context of video games.  However, one thing is certain.  This issue is ripe for Supreme Court review.  There is confusion among the lower courts as to how they should reconcile the right of publicity with the First Amendment rights of video game creators.  Arguably, there is already a circuit split on this issue because the Eighth Circuit took a contrary position when it found in favor of a fantasy baseball provider back in 2007.

The circuit split is likely to grow as similar lawsuits continue to develop.  For example, Lindsey Lohan recently sued the publisher of Grand Theft Auto V on similar grounds in New York (Case No. 156443, NY Supreme Court).   Maybe one more circuit weighing in on the issue will give rise to the circuit split needed to get the Supreme Court’s attention.  Or, perhaps that won’t necessary and the Ninth Circuit’s ruling in Davis will be sufficient to get the Supreme Court to grant certiorari.

We will be certain to report back once the Ninth Circuit issues its ruling in Davis.

The United States Supreme Court issued its decision in Integrity Staffing Solutions, Ins. v. Busk on December 9, 2014 and reversed the Ninth Circuit Court of Appeal in a much awaited wage and hour decision concerning the issue of “compensable time” under the federal Fair Labor Standards Act (“FLSA”).

The facts of the case are very straight forward.  Integrity Staffing Solutions, Inc. (“Integrity”) required its hourly non-exempt ware­house workers (who retrieved products from warehouse shelves and packaged them for delivery to Amazon.com customers), to undergo a security screening before leaving the warehouse each day.  A number of former employees sued Integrity alleging, in part, that they were entitled to compensation under the FLSA for the roughly 25 minutes each day that they spent waiting to undergo and undergoing those screenings. The employees also alleged that the company could have reduced that time to a de minimis amount by adding screeners or staggering shift terminations and that the screenings were conducted to prevent employee theft and, thus, for the sole benefit of the company and its customers.

The District Court dismissed the complaint for failure to state a claim, holding that the screenings were not integral and indispensable to the employees’ principal activities but rather were postliminary and non-compensable under FLSA. The U. S. Court of Appeals for the Ninth Circuit reversed the District Court in relevant part, asserting that post-shift activities that would ordinarily be classified as non-compensable postliminary activities are compensable as integral and indispensable to an employee’s principal activities if the post-shift activities are necessary to the principal work and performed for the employer’s benefit.

Relying on the Portal-to-Portal Act, the Supreme Court disagreed with the Ninth Circuit and found that the time employees spent waiting to undergo and undergo­ing security screenings is not compensable under the FLSA.  As the Court explained, the Portal-to-Portal Act exempts employers from FLSA liability for claims based on “activities which are preliminary to or postliminary to” the performance of the “principal activities” that an employee is employed to perform.  Under U. S. Supreme Court precedent, the term “principal activities” includes all activities which are an “integral and indispensable part of the principal activities.”  An activity is “integral and indispensable” if it is an intrinsic element of the employee’s principal activities and one with which the employee cannot dispense if he is to perform his principal activities.

According to the high Court, the security screenings at issue were non-compensable postliminary activities for a number of reasons.  To begin with, the screenings were not the principal activities the employees were employed to perform (i.e., the workers were employed not to undergo security screenings but to retrieve products from warehouse shelves and package them for shipment).  Further, the screenings were not “integral and indispensable” to those principal activities the employees performed. The Court said that this view of the screening at issue is fully consistent with an Opinion Letter that the Department of Labor (“DOL”) issued as far back as 1951. That Letter found as non-compensable, a pre-shift security search of em­ployees in a rocket-powder plant “for matches, spark producing devices such as cigarette lighters, and other items which have a direct bearing on the safety of the employees,” as well as a post-shift security search of the employees done “for the purpose of preventing theft.”  As the Court pointed out, the DOL drew no distinction between the searches conducted for the safety of the employees and those conducted for the purpose of preventing theft – neither were compensable under the Portal-to-Portal Act.

The Court held that the Ninth Circuit erred by focusing on whether an employer required a particular activity rather than whether it was tied to the productive work that the employee was employed to perform.  The Court said that if the test could be satisfied merely by the fact that an employer required an activity, it would sweep into “principal activities” the very activities that the Portal-to-Portal Act was designed to exclude from compensation.  Finally, with respect to the employees’ claim that an employer could conceivably reduce the screening time to a de minimis amount of time if the employer implemented other measures, the Court said that this does not change the nature of the activity or its relationship to the principal activities that an employee is employed to perform.  If employees wish to pursue these arguments they should take it up at the bargaining table, not in court in an FLSA claim.

Lesson for Employers:  The Court’s decision makes clear that based on the Portal-to-Portal Act, the time employees spend undergoing security screenings is non-compensable under the FLSA.  The decision also provides helpful guidance when determining whether other pre-shift and post-shift activity may or may not be compensable. While there is no black and white answer to provide certainty for employers as to the compensability of a host of pre- and post-shift activities, one thing is clear from the Court’s unambiguous holding – the mere fact that the employer requires a particular activity does not make the time spent in that activity compensable.

By: Intellectual Property Group

If you use Facebook, you probably already have noticed that many users are posting statements claiming that Facebook somehow acquires ownership of users’ intellectual property that has been posted to that site.  Reacting to this entirely erroneous proposition, many Facebook users have posted very scary and onerous status updates aggressively asserting their intellectual property rights in the materials they have uploaded onto Facebook.  One user posted that they “hereby declare that my copyright is attached to all of my personal details, illustrations, comics, paintings, crafts, professional photos and videos, etc. . . . for commercial use of the above my written consent is needed at all times!”  (Undoubtedly her use of an exclamation point will add significant legal weight when this status update is considered by a court in the forthcoming case of Everyone v. Facebook.)  That same user warns us that violation of her privacy is punished by law, UCC 1 1-308-308 1-103 and the Rome Statute.  Undoubtedly, Facebook is horrified by the prospect of violating either of these statutes.  Or not.

This Facebook user (and legions of other Facebook users who (ironically) have copied her ominous copyright warning) apparently have missed the plainly worded terms governing the use of Facebook’s online services.  While it’s not clear how the Uniform Commercial Code or the Rome Statute possibly could govern the relationship between a Facebook user and the website, the Facebook terms of use agreement clearly states that “you own all of the content and information you post on Facebook . . . .”  The agreement further provides that users merely give Facebook a limited, non-exclusive license to any intellectual property content posted on the website, a license which expires when the content is deleted by the user.  Perhaps these simple contract terms were missed during the analysis of international criminal statutes (which have not been ratified in the United States), or laws related to the sale of goods.

While a copyright owner’s right to exclude others from using their work arises as a matter of law, we always must keep in mind that rights in a copyrighted work are often granted, modified, or otherwise controlled by the terms and conditions of contracts.  Indeed, almost any aspect of the exclusive rights vested in a copyright owner may be licensed or assigned to others based on the terms and conditions of a license agreement.  A copyright owner can, by contract, divide her exclusive rights in almost any conceivable manner.  There is, therefore, a simple lesson to the myriad Facebook users who have re-posted this copyright notice on their Facebook status: Most online contracts are binding, you should read them before you accept them.  At the very least, consider reading a contract that you have already signed before researching inapplicable statutes.  These silly updates are worse than posts about Farmville or Mafia Wars.

Earlier this year, we advised employers that the Bay Area Commuter Benefits Program (“CBP”) was going into effect, beginning September 30, 2014. (Govt.  Code §65081.)  This post provides additional information on the requirements and implementation.

As a reminder, the CBP is now mandatory for  any public, private, or non-profit entity employing an average of 50 or more full-time employees per week within the geographic boundaries of the Bay Area Air Quality Management District (“Air District”) (covering San Francisco, the peninsula, the East Bay, North Bay, and South Bay counties.  (Coverage map: https://mapsengine.google.com/map/viewer?mid=zEtIldN2taQk.kBcuja_KVQNU.)  The CBP is a pilot program, pursuant to state law, in effect only until January 1, 2017, unless extended before that date.

Which Employees Count under the CBP? For purposes of counting full time, paid employees, the following rules apply:

By: Labor and Employment

On November 4, 2014, Oakland voters passed measure FF.  This measure establishes a minimum wage in the City of Oakland to $12.25 per hour beginning March 2, 2015.  This brings Oakland’s minimum wage increase in line with San Francisco’s minimum wage, which also increases to $12.25 effective May 1, 2015.  Proposition FF also requires that Oakland employers provide paid sick leave to their employees beginning on March 2, 2015. Employees would accrue one hour of paid sick leave for every 30 hours worked.  Employers may cap paid sick leave earned by an employee at 40 hours for employees of small businesses (defined as employers who normally have fewer than ten workers) and 72 hours for employees of other employers.  Employees may use paid sick leave for the employee’s own illness or injury, or to care for certain family members who are ill or injured.  Employees with no spouse or domestic partner may designate one person for whom the employee may use paid sick leave to provide care.  All of these paid sick leave provisions mirror San Francisco’s Paid Sick Leave Ordinance which voters previously passed and became effective 2007.

Recently the 11th Circuit addressed on appeal the question of whether fair use insulates from copyright liability a University which offers to its students a digital repository of reading material culled from third party publications without the benefit of a license.   Three academic publishers filed suit against Georgia State University claiming that the University infringed their copyrights by maintaining a policy which allows GSU professors to make digital copies of excerpts of their books available to students without paying them a royalty.  Prior copyright cases known as the “course pack cases” – cases in which commercial copy shops were found to have infringed copyrights by printing course packs containing excerpts from third party publications without permission from the publishers – seemed to dictate a finding of infringement.  However, of the 74 instances of infringement alleged, the lower court found that the Plaintiffs failed to establish a prima facie case of infringement for 26 works and that fair use applied to all but 5 instances.

The fair use of a copyrighted work is not an infringement of copyright.   The four factors a court must consider in determining whether fair use applies are: (1) the purpose of the allegedly infringing use, (2) the nature of the original work, (3) the size and significance of the portion of the original work that was copied, and (4) the effect of the allegedly infringing use on the potential market for or value of the original.

In weighing the fair use factors, the lower court applied a very mechanical analysis and held that fair use applied whenever at least three of the four factors favored GSU. The lower court held that the first and second fair use factors strongly favored GSU since the copies are of excerpts of copyrighted works that are informational in nature and used for teaching students and for scholarship.  As for the third factor, the lower court determined that where a professor posted an excerpt that was less than 10 percent of the total work, this would support a finding of fair use.  As for the fourth factor, the lower court found that the use of small excerpts did not affect the publishers’ actual or potential sales of books because they do not substitute for the books, and where permissions to use book excerpts are not readily available through a third party licensing service, this also supports a finding of fair use.

Although technically a victory for the publishers, they challenged the lower court’s analysis on multiple grounds.  The publishers argued that each of the four factors should not have been given equal weight.  The publishers also argued that the course pack cases should have been controlling.

The Appeals Court vacated the decision of the lower court and then engaged in a lengthy analysis of the lower court’s fair use analysis.

The first fair use factor has several facets including whether such use is “transformative”  and also whether the use is for a nonprofit educational purpose, as opposed to a commercial purpose.  Under the course pack series of cases, the court found that that the copy shops infringed copyrights by printing course packs containing excerpts from third party publications without permission from the publishers.  Applying the first fair use factor, the photocopying was not fair use primarily because (i) the use was not transformative because the copy shop merely “re packaged” the excerpts into bound volumes; and (ii) despite the educational use of the course packets, the copy shop’s own use was commercial in nature.

In reviewing the first fair use factor, the Appeals Court, similar to the course pack courts, found that the verbatim copies of portions of the original books posted online is not a transformative use.  It is in the Appeals Court’s analysis of the second facet of the first factor – whether the use is for a nonprofit educational purpose, as opposed to a commercial purpose – that a different result is reached.

The commercial or non-transformative uses of a work are separate factors that are accorded their own weight for or against the finding of fair use. Even where such use is non-transformative, nonprofit educational use may weigh in favor of a finding of fair use under the first factor.  Because the very purpose of Copyright is to promote creation and learning, the Court noted that some leeway must be given to educational use.

The Court found that holdings of the course pack cases do not dictate the findings of this case.  In the course pack cases, the court noted that the first factor weighed against a finding of fair use when the non-transformative, educational use in question was performed by a for-profit copy shop, and was therefore commercial.  Here, the Court notes that the use is by a non-profit, educational institution for educational purposes.  The Court found this to be a significant distinguishing factor from the course pack cases and that this “places sufficient weight on the first factor scales to justify a finding that this factor favors fair use despite the non‑transformativeness of Defendants’ use.”

While the Appeals Court’s review of the first fair use factor is certainly a blow to the publishers, the Court’s opinion was not a complete loss for the publishers.  The Court found that the lower court erred in applying a mathematical approach to determining whether fair use is applicable – if three factors favor fair use, fair use is to be found.  The Court also took issue with the lower court’s holding that copying less than a chapter or 10 percent of a book is a safe harbor from copyright infringement.  As most copyright attorneys tell their clients when asked how much of a work may be safely copied, there is no set rule; each instance of copying must be analyzed and the quantity and quality of the material taken must be considered as well as whether the taking was excessive in light of the purpose and the threat of market substitution.

Apparently the publishers are not happy with the decision by the 11^th Circuit; they are asking the 11^th Circuit to rehear their case against GSU.

In March 2014, this column analyzed a decision by a Ninth Circuit panel in Garcia v. Google, Inc., in which the Court held that an actress, who believed she was appearing in a minor role in an Arabian adventure movie, could maintain a copyright infringement claim against the producers when they used the footage instead in an anti-Islamic film that resulted in her receiving death threats. As the prior column surmised, it appeared that “bad” (although entirely sympathetic) facts were making “bad” law.

This week, the Ninth Circuit ruled that it would rehear the matter en banc and ordered that its previous decision “not be cited as precedent by or to any court of the Ninth Circuit.” It remains to be seen whether the entire Ninth Circuit will take a different position this time (and hold that the lower court properly denied the injunctive relief) or take the opportunity to emphasize just how limited the scope of its prior ruling was intended to reach.

Below is the original column analyzing the Ninth Ciruit’s original ruling in this case.

A Bit Part, A Fatwa and Copyright Infringement

Most law students learn early in law school the old maxim: “Bad facts make bad law.”  A recent Ninth Circuit case, Garcia v. Google, Inc., seems certain to test this proposition with its incredibly sympathetic facts.

Ms. Garcia, an aspiring actress, was paid approximately $500 to appear in a minor role that she believed to be an Arabian adventure movie titled, “Desert Warrier.”  Instead, a clip of her performance was used in an anti-Islamic film titled, “Innocence of Muslims,” which was posted to YouTube.  (Google is the owner of YouTube.)  Not only was her performance included in this movie, but her lines had been “dubbed over” so that the line audiences heard her say was “Is your Mohammed a child molester?”  The film and this line provoked anger worldwide and an Egyptian cleric issued a fatwa calling for the killing of everyone involved with the film.  Shortly thereafter, Ms. Garcia began receiving death threats.

In addition to taking security precautions, Ms. Garcia filed a number of “take down notices” under the DMCA seeking to have YouTube remove Innocence of Muslims from its website.  When Google refused, Garcia filed a copyright infringement action and sought a preliminary injunction ordering Google to take the film down from YouTube.  The court denied Garcia’s request.

Garcia appealed this ruling to the Ninth Circuit.  In a 2-1 decision authored by Chief Judge Alex Kozinsky, the Ninth Circuit reversed the lower court and held that an injunction should have been entered.

The bulk of the Ninth Circuit’s decision (as well as the dissent) focuses on the first factor that must be established for injunctive relief, the likelihood of success on the merits.  Although Ms. Garcia was not seeking to claim that she had a copyright interest in the film, she argued that she had a copyrightable interest in her performance within the film.  The Ninth Circuit recognized that “[t]o succeed on this claim, Garcia must prove not only that she likely has an independent interest in her performance but that [the film’s producer] doesn’t own any such interest as a work for hire and that he doesn’t have an implied license to use her performance.”  The Court first turned to whether Garcia had an independent copyright interest in her performance.

The Court recognized that a film “is typically conceived of as `a joint work consisting of a number of contributions by difference `authors’’.”  While Garcia did not qualify as a “joint author” under Ninth Circuit precedent, that did not mean “she doesn’t have a copyright interest in her own performance within the film.”  In reaching this issue, the Ninth Circuit admitted that this “is a rarely litigated question”.

The Court claimed that the Copyright Act does not necessarily prevent a contributor from obtaining a copyright interest in a creative contribution to a work and therefore, “the key question remains whether it’s efficiently creative to be protectable.”  Although Google argued that the film’s producer wrote the lines that Garcia spoke, managed all aspects of the production and later dubbed over a portion of her scene, the Court concluded that the actor does “far more than speak words on a page.”  The actor provides “body language, facial expression and reactions to other actors and elements of a scene.”  The Ninth Circuit observed sharply “otherwise `every schmuck … is an actor because everyone … knows how to read’.”  The Court continued that an actor’s performance may be copyrightable “if it invents `some minimal degree of creativity … know matter how crude, humble or obvious’ it might be.”  The Court cited the performances of a silent actor like Buster Keaton to make this point.  The Court concluded without elaboration: “[I]t’s clear that Garcia’s performance meets these minimum requirements.”

The Court continued by distinguishing the copyrightable interest that Garcia had in her performance from the copyrightable interest the producer had in the film.  The Court noted that the producer “implicitly granted” Garcia a license by hiring her to perform his screen play.  While that did not give her a copyright in Innocence of Muslims, Garcia could assert a copyright interest “in the portion of `Innocence of Muslims’ that represents her individual creativity,” which the Court again found without elaboration that this was not de minimis.  Seeming to recognize the slippery slope upon which it embarked, the Court states:  “We need not and do not decide whether every actor has a copyright in his performance within a movie.  It suffices for now to hold that while the matter is fairly debatable, Garcia is likely to prevail.”

Having found that Garcia had a copyrightable interest in her performance, the Court had to turn away Google’s defenses that Garcia made a “work for hire” or granted the producer an implied license to use her performance in Innocence of Muslims.  First, the Court recognized that “under the work for hire doctrine, the rights to Garcia’s performance vested in [the producer] if Garcia was [his] employee and acted in her employment capacity or was an independent contractor who transferred her interest in writing.”  It was undisputed that there was no signed writing by plaintiff that constituted a work for hire agreement (although there was apparently a document with her forged signature).

As to whether Garcia was an employee, the Court found that this was “a good example of why it is difficult to categorize an actor, particularly one in a small role as a conventional employee.”  The Court noted that the producer hired her only for a specific task,  she worked for only a couple of days and other than a payment of approximately $500, did not receive any of the benefits that would normally be paid to an employee.  Thus, the Court found that Garcia’s performance was not a work for hire and that she could state an infringement claim.

Next, the Court turned to whether Garcia had granted the producer an “implied license” to use her performance in Innocence of Muslims.  The Court noted that it had previously found an implied license even though “plaintiff’s contribution to a film or other work would otherwise be worthless or of `minimum value’.”  The Court noted that Garcia had auditioned for the role, was paid for her performance and believed that the director would eventually release the film and thus had obviously granted the director an implied license of some sort.  The Court noted that because an implied license is to be construed broadly, the fact that “a film didn’t meet the ex ante expectation of an actor” does not render it meaningless.  The Court ruled, however, that an implied license is not unlimited.

The Court found it significant that plaintiff was lied to as to the type of film her performance was to be used in. Specifically, the Court reasoned that “Innocence of Muslims” was not an Arabian adventure movie as had been represented to Garcia, but rather, “that the film isn’t intended to entertain at all.”  Because the Court concluded that the producer  committed fraud on Garcia, it concluded that Garcia did not give the director/producer an implied license to use her performance in Innocence of Muslim.  Once again, recognizing the apparent slippery slope of this position, the Court cautioned: “The situation in which a filmmaker uses a performance in a way that exceeds the bounds of the broad implied license granted by an actor will be extraordinarily rare.”

The Court continued by considering the other injunction factors and found that the district court had erred in not granting Garcia a preliminary injunction.  The Court ordered Google to remove Innocence of Muslims from YouTube.com.

The Dissent in Garcia began by noting the broad deference to be given to a trial court in determining whether or not to grant injunctive relief.  The Dissent found that it was not error for the district court to conclude at this preliminary stage that it was unclear whether the law granted Garcia a copyrightable interest in her performance.  He concluded that under the Copyright Act, while “a motion picture is a work,” the Act “does not clearly place an acting performance within its sphere of copyrightable works.”  He also reasoned that Garcia could not be considered the “author” of the work since she admitted “she had no creative control over the script or her performance.”  In essence, the Dissent concluded that she “was not the originator of ideas or concepts” but had “simply acted out other’s ideas or script.”

The Dissent also found that there was no error in the finding that plaintiff made a work for hire, which doctrine “is important in the analysis of motion picture authorship because in the United States most contributions to a motion picture are created as works made for hire.”  The Dissent found it significant that the producer provided the instrumentalities and tools, was in charge of the filming location, decided when and how long plaintiff would work, and was engaged in the business of film making.  Thus, it was not a stretch to conclude that plaintiff was an employee for purposes of the film.  The Dissent concluded that “the majority gave zero deference to the district court’s position on the likelihood for successor factor.”

It is clear that the plaintiff in Garcia v. Google was placed in a very sympathetic position given the apparent fraud that had been perpetrated on her and the death threats she received.  The majority went to great lengths to make clear that this case was “extraordinary” to justify its decision that the lower court had abused its discretion in denying injunctive relief.  It remains to be seen whether other actors (or other performers such as musicians in a band) may seek to assert some kind of copyrightable interest in their “performance” or whether the Ninth Circuit will have to revisit Garcia to ensure that its finding is limited to those most extraordinary circumstances.

One of the more important intellectual property cases decided in 2014 is the U.S. Supreme Court’s decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc. (2014) 134 S.Ct. 1749.  In that case, the Supreme Court announced a new test for awarding attorneys’ fees in patent infringement cases, holding that the existing test used by the Federal Circuit Court of Appeals was “overly rigid.”

The plaintiff, Octane Fitness, and the defendant, ICON Health, both made elliptical exercise machines.  ICON owned a U.S. patent for its machine.  ICON sued Octane for patent infringement.  The district court granted summary judgment of noninfringement in favor of Octane.  Octane filed a motion to seeking its attorneys’ fees under 35 U.S.C. section 285.  The district court denied the motion.  On appeal, the Federal Circuit Court of Appeals affirmed.

The Supreme Court reversed, stating that “the framework established by the Federal Circuit in Brooks Furniture Mfg. v. Dutailier International (Fed. Cir. 2005) 393 F.3d 1378 is unduly rigid, and it impermissibly encumbers the statutory grant of discretion to district courts.”  Id. at 1755.  The Court held that the Federal Circuit’s test in Brooks Furniture was “overly rigid.”  Id. at 1756.  Under that test, a case was exceptional if there was either:  (1) litigation-related misconduct, or (2) subjective bad faith and objective baselessness.  According to the Federal Circuit, the first alternative, litigation misconduct, would be found it there was willful infringement, vexatious litigation, a Rule 11 violation, or fraud or inequitable conduct in obtaining the patent.  Under the second alternative, subjective bad faith was met only if the plaintiff actually knew that its suit was objectively baseless, and objective baselessness was met if no reasonable litigant could believe they would prevail.  In addition, the Brooks court held that a defendant had to prove an exceptional case by clear and convincing evidence.

With respect to the litigation misconduct test, the Supreme Court said that this conduct was independently sanctionable, and that sanctionable conduct was not the proper test for an “exceptional case.”  With respect to the second test, the Court held it was too restrictive, explaining that any case where there was either subjective bad faith or objective baselessness should qualify as “exceptional.”  According to the Court, the Brooks test is “so demanding that it would appear to render section 285 superfluous.”  Id. at 1758.

The Court held that the Brooks test is a “rigid and mechanical formulation” that “superimposes an inflexible framework onto statutory text that is inherently flexible.”  Id. at 1754 and 1756.  The Court announced a new, more flexible test for an exceptional case: a case is exceptional if it “stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.”  Id. at 1756.  In applying this test, the district courts must utilize their discretion in a case-by-case basis, considering “the totality of the circumstances.”  Id.  There is no “precise rule or formula.”  Id.  The Court also rejected the Federal Circuit’s requirement of clear and convincing evidence, holding that such a standard was too onerous, and that the proper standard of proof is a preponderance of the evidence. Id. at 1758.

The new test set forth by the Court is actually an old test.  As the Court noted, at 1754, before Brooks, the Federal Circuit applied a “totality of the circumstances” test and exercised its discretion in a “holistic, equitable approach.”  The return to this test will likely make attorneys’ fees in patent infringement cases a little easier to recover.